Currently in CRE debt at BB looking to pivot to equity. I understand the structural difference between a REIT and REPE firm (how they're capitalized, what they can/can't do with their earnings, etc.). I was wondering if someone could elaborate a bit on the difference in working at the two at the analyst level (acquisitions/asset mgmt. type role). Thanks in advance.
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REITs by nature/structure (and even tax provisions) do not trade properties that all that often. Some REITs will be acquisition/deployment mode but many do very little in a given year. Thus, a REIT is really a property owning company most of the time, so asset management/value creation is a major focus of the firm. All eyes on stock price, NAVs, FFO, etc. The other big difference comes from the fact that the capital markets team could be selling/trading bonds and equity shares based on market pricing/timing, not on deal space or real estate market dynamics; so REITs often rely on lines of credit to fund acquisitions.
For an analyst, and most of the team, you will probably get to go home at 6pm quite often (assuming you go to an office these days). Deal pressure can make you pull overnighters, but not that often. The big stress period will align with quarterly/annual reporting dates, audits, and investor meetings/calls. Expect to stay late ahead of those deadlines.
Thanks for the response. Appreciate the insight into the difference in investing/hold strategies. As far as day to day, would you say the two are somewhat comparable (understand hours will be worse in PE)?
Honestly I think it is tough to generalize, both REITs and REPE firms come in all sizes and varieties, working at a "top 5" in either category will be different than something in the bottom 50 (note, I am implying just a simple ranking by total assets, nothing else). REITs tend to be very specialized and focused, they really resemble a pretty normal corporate type environment on average. Thus, I'm not sure if being a financial analyst at a REIT is that far off from being a corporate finance analyst at any other firm like Boeing.
If you are being hired/placed on a focused team (and you probably will be), then you will focus on that aspect of the business (like managing all assets in the southeast for example). So day to day will be driven by your focus and thus I'd imagine you are more narrow cast at most REITs (maybe not in a small one).
PE firms generally look and act like true high-finance investment management shops. Real estate isn't their business per se (like a REIT would say), but an investment strategy or allocation. You are truly in the finance/investment game at a REIT, it's deals and returns, and the structure of the PE business model (limited duration funds) makes frequent transactions a necessity to derive profits to the manager.
In fact a lot of the big PE shops will own/keep portfolio companies that act as the real estate manager with the true real estate people within it (like BX does with its suite of companies like EQ Office). Thus, your life in one of those companies is probably comparable to that of a REIT. At the PE shop, you are a deal/finance expert, you can hire out the management expertise (that is the true PE model).
What gets confused (at least on WSO), is that some PE shops have built full blown real estate shops within their firms, and these jobs are more true real estate jobs and NOT real PE finance type jobs (and yes, some are actually hybrid). So, true REIT job is a real estate job, a true PE job is a finance job, and thus I think day to day will be pretty different most days.
100% agree with you regarding both points on the traditional PE and culture.
On culture, I agree it will determine how the firm operates. There are REITs that are known sweat shops and PE firms that are super laid back and an easier life style.
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